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Medical product manufacturing has enormous growth potential. Opportunities in the sector come from the growing demand for healthcare (driven by an aging population), advances in customised and precision healthcare, and digital technologies.

In 2018, global spending on health reached US$8.3 trillion, or about 10% of global GDP.[17] Growth per capita in health spending has been consistently above 2% over the past 2 decades.[18] Growth is strong in Australia’s neighbouring markets. By 2050, the United Nations estimates 37% of the world’s older population (aged 65 and over) will live in Eastern and South-East Asia.[19]

The population in the tropics is growing at a much faster rate than the rest of the world.[20] Austrade notes this will provide significant opportunities for developing new industries and exporting goods and services for tropical areas.[21] In the medical products sector, Australia could manufacture products to address health challenges such as antibiotic-resistant tuberculosis, malaria and other vector-borne diseases, and emerging infectious diseases.

Australian businesses are well-placed to supply these products, drawing on our:

  • world-class research
  • highly skilled workforce
  • respected regulatory framework
  • reputation for producing high-quality, complex and safe medical products.

These competitive strengths lie in high-value, complex medical products that require sophisticated manufacturing processes and technologies.

Australia’s science, research and innovation capabilities are critical enablers of transformation in manufacturing, particularly in the medical product sector. Both the government and industry can seize new opportunities through embracing new technologies, processes and practices, including automation, digital operations and innovation. These enablers will support business competitiveness and will have positive spill-overs across our economy, while helping our manufacturers scale their operations and harness emerging opportunities.

Priority areas

Medical products range from everyday items like wound dressings and gloves, to highly sophisticated products like implants, vaccines and life-saving drugs. The medical products sector is a dynamic environment that is continually developing new technologies.

Key growth opportunities include:

  • smart monitoring devices and diagnostics, personalised implants and bionics
  • high-value pharmaceuticals, biologics and complementary medicines
  • cutting-edge treatments, including regenerative medicine and genomics
  • digital technology and platforms
  • animal health.

In many cases these opportunity areas overlap. For example, new implants may release pharmaceuticals into the bloodstream while simultaneously providing live data to medical workers on a patient’s vital signs.

Smart monitoring devices and diagnostics, personalised implants and bionics    

The devices medical professionals use to diagnose, monitor and treat medical conditions are becoming smarter and more customised. Production of these devices will require more sophisticated manufacturing processes, generating value across the product lifecycle in design, manufacture and diagnostics. Australia’s track record as a high-quality and safe manufacturer offers opportunities for Australian businesses to meet demand for these new products.

Development timelines and costs are generally lower for medical devices, compared to pharmaceuticals and biologics.[22] This means that small and medium-sized companies are better able to compete and capture value.

Smart monitoring devices and diagnostics

Smart monitoring devices and diagnostics, and the algorithms that interpret the data generated, help medical professionals and patients make better health decisions. Highly technical and sophisticated monitoring and diagnostics instruments are used in clinical settings, like ECG machines, respiratory monitors and biosensors. These devices are becoming smarter—capturing more data, integrating more with other medical equipment, and using more sophisticated analysis—to give better insights. Future growth opportunities include better wearable devices for high-risk industries (for example, mining) and ingestible smart devices and biosensors. Point-of-care and home diagnostics are also key drivers of market demand.[23]

Implants

Implants include devices placed inside or on the surface of the body. They are usually made from plastics, metals, ceramics or tissues such as skin or bone. Australian manufacturers are achieving better health outcomes by using innovative manufacturing methods to improve implant fit and performance. Implants are increasingly being integrated with monitoring devices to provide new insights.

Future growth opportunities for Australian businesses will likely include 3D printed or custom-made tissues and organs, along with surgery models to help prepare for complex surgeries. This could leverage off Australia’s growing capability in additive manufacturing.

Bionics

Bionics are artificial systems that are able to function like or support living systems. For example, a hearing aid works like a human ear to help people hear. Bionics bring together Australia’s world leading engineering, materials science and medical research communities. Future products are likely to include bionic hearts and eyes, along with artificial limbs controlled by neural pathways. Australia has significant expertise in this area built through companies like Cochlear.

High-value pharmaceuticals, biologics and complementary medicines

Medicines may contain a single active component or multiple active components (complex medicines). Although there are many ways of characterising medicines, the 3 main categories are:

  1. Pharmaceuticals, which are chemically synthesised and have a known structure (often described as ‘small molecule’ drugs).
  2. Biologics, which are derived from a biological process and may be composed of proteins, nucleic acids, living tissues and cells (often described as ‘large molecule’ drugs and vaccines).
  3. Complementary medicines, including certain vitamin, mineral, herbal and nutritional products.

The cost and length of time required to bring a new medicine to market can be substantial.[24] Businesses need to globalise and tap into larger markets to generate a return on investment. Australia may not be able to compete with high-volume producers who are close to large markets with very low input costs.

Australia does have a track record of high‑quality, clean and safe manufacturing. This creates an advantage in making complex medicines using highly sophisticated processes. Precision healthcare and growth in new markets is driving increased global demand for these more complex, customised products.

Proprietary and complementary medicines are 2 areas where Australian manufacturers can command premium prices. Proprietary medicines are still under patent protection and give manufacturers a higher profit margin. Australia’s reputation as a clean and safe manufacturer can also be leveraged to command higher prices when exported. This includes premium Australian-made products such as complementary medicines and nutraceuticals, including vitamin supplements and minerals, fortified foods, functional foods and beverages. Nutraceuticals could be worth $4 billion by 2030.[25]

Generic pharmaceuticals and biosimilars command lower profit margins.[26] Investing in highly efficient and automated facilities could offer Australia some opportunities to manufacture certain generics and biosimilars which are particularly complex products.

Clinical trials are another important opportunity area which provides a key stepping stone to full-scale production. Agile domestic manufacturing could be scaled to supply this market. Industry stakeholders have noted that clinical trials are a ‘sticky’ foundation to large-scale production. The efficiencies manufacturers gain from co-locating late-stage trials with production, make retaining trials a significant factor in capturing additional value.

Cutting-edge treatments, including regenerative medicine and genomics

Cutting-edge treatments such as genetic and stem cell technologies have the power to change lives and transform the medical products sector. Commercialising these products in Australia also offers early access to potentially lifesaving treatments to Australian patients. Drawing strength from our cutting-edge research capabilities, Australia has the potential to accelerate medical product commercialisation in regenerative medicine (RM), genomics and mRNA vaccines.

Regenerative medicine (RM)

RM is a relatively new field of study that treats injuries and diseases by harnessing the body’s ability to heal itself.[27] The global RM market is estimated to be worth AU$120 billion by 2035.[28] RM has a range of high potential applications. This includes growing and repairing organs, and new cellular therapies that treat disease and genetic disorders, such as Parkinson’s disease, Alzheimer’s disease, multiple sclerosis and leukaemia.[29] While Australia has been at the forefront of RM research, including conducting some of the world’s first human stem cell trials, there are opportunities to further commercialise this research.[30]

Genomics

Genomic technology is a new and potentially disruptive technology. Genomic medicine refers to diagnosis and treatment based on DNA sequencing.[31] It promises better patient outcomes and a more efficient health system through rapid diagnosis, early intervention, prevention and targeted therapy.[32] There are opportunities for Australian manufacturers to leverage Australia’s significant research capability to commercialise products. This could potentially deliver cures for cancer, children’s illnesses and diseases with low survival rates.

mRNA vaccines

During the COVID-19 pandemic Australian researchers have collaborated with industry to build capability in the development of mRNA vaccines, which are at the forefront of global medicine. Normal vaccines contain elements of a virus. mRNA vaccines work differently by only delivering the genetic instructions for our cells to make viral proteins which cause the body to launch an immune response. As mRNA molecules are simpler to produce than proteins and can be manufactured by chemical synthesis, mRNA vaccines are quicker to be redesigned, scaled-up and mass produced. Building on Australian research leadership and new global demand, there could be opportunities for Australia to become a manufacturer of mRNA medicines.

Digitally integrated products and platforms

Integrating digital technologies into their products is a commercial opportunity for Australian manufacturers to improve their value proposition and tap into new, high-value opportunities. This includes integrating digital technology into existing products, such as smart pill bottles that remind patients when their next dose is due.[33] New products are also emerging including sensors, wearables and other connected devices. Australians are often early adopters of new health technology, giving Australian companies a competitive advantage from an informed test market, before they take their products global.

Digital technology refers to a wide range of tools and systems that generate, store and process data. This includes traditional IT technologies, along with new cross-cutting technologies such as artificial intelligence (AI) and machine learning (ML), blockchain, robotics, quantum computing and the Internet of Things (IoT). Digital technology is transforming how healthcare is delivered, refreshing existing products, creating new products and improving existing processes and business models.

Continued improvement in data collection and analysis is revealing new insights, which can be leveraged into commercial products. Patients and clinicians can draw on data from multiple sources, make sense of it using AI software, and then make better health decisions.[34] The George Institute for Global Health is using data platforms in health care delivery. Uses include text messages to improve medication compliance in people with cardiovascular disease and the ‘FoodSwitch’ app, which allows consumers to scan food labels and find the healthiest choices.[35] Better data management and software monitoring is reducing human error, the cost of care, and improving health service delivery.

Animal health

A broad range of medical products are used to support animal health. Often, these products use similar technologies to human health products. For example, a biological vaccine for animals is produced using the same methods as human vaccines, but may be packaged differently. In 2019, factory gate sales of veterinary medicines for the production sector was $509.7 million and for companion animals, $550.6 million.[36]

Animal health is a growing area of economic opportunity. Healthy animals also produce safe, high-quality food and fibre products for local and international markets. In 2020–21, Australian veterinary pharmaceutical manufacturing is expected to generate $852 million in revenue with 5.4% annualised growth since 2016 and employ approximately 1,300 people.[37] Recovering herd numbers, advances in farming practices and growing expenditure on pet wellbeing are key drivers of this growth trend.[38]

Growing areas of global demand in animal health include vaccines and new antimicrobials, which are agents that treat bacteria, fungi, algae, virus and parasite infection. These products are a critical input to support domestic livestock health and use technologies similar to those used in human health. The use of animal medicines in the livestock industry improves animal health, welfare and productivity in a sector that accounts for more than 10% of production in Australia’s key commodity groups, contributing more than $2.6 billion to the Australian economy.[39]

Monitoring devices and diagnostics also support animal health, providing commercial opportunities to sell to Australian primary producers. Rapid diagnostic tests allow for on-farm testing of disease and vaccination status, facilitating improved animal care decisions. As demand for these new products grow, there is an opportunity for Australian manufacturers to develop competitive advantage and supply Australian and international primary producers.

Funding available

The Modern Manufacturing Initiative is now open for medical product manufacturing projects that meet eligibility under its Translation and Integration streams.

Footnotes

17 World Health Organisation, Global spending on health 2020: weathering the storm, 2020, p.ix, accessed 13 January 2021.

18 World Health Organisation, Global spending on health 2020: weathering the storm, 2020, p.4, accessed 13 January 2021

19 United Nations (2019) World Population Ageing Highlights, 2019, p.6, accessed 12 January 2021

20 By 2025, the sum of the world’s tropical economies—the global tropical product—is projected to reach US$40 trillion. Trolinks Inc Professor Peter Andrews, Queensland Chief Scientist, ‘Tropical potential: a tale of two inequities’, September 2009 in Austrade, Northern Australia: Emerging opportunities in an advanced economy, 2017, accessed 8 January.

21 Austrade, Northern Australia: Emerging opportunities in an advanced economy, 2017, accessed 8 January.

22 MTPConnect highlights that medtech products typically only need between 4–10 years with an average cost of US$30 million to US$150 million. See MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, 2020, p. 8.

23 CSIRO, Medical Technologies and Pharmaceuticals: A Roadmap for unlocking future growth opportunities for Australia, 2017, p. 14.

24 MTPConnect highlight that the risk-adjusted costs of bringing a new medicine or vaccine to market is estimated at between US$648 million and US$2.6 billion. See MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, 2020, p. 8.

25 CSIRO, Victoria’s Nutraceutical Industry: A Roadmap to unlock future growth opportunities for Victoria, 2020 p. 3, accessed 6 January 2021.

26 Biosimilars are biologic medicines that treat the same disease in the same way as a reference biologic, but are no longer patent protected.

27 MTPConnect, Regenerative Medicine: Opportunities for Australia, 2018, p.2.

28 MTPConnect, Regenerative Medicine: Opportunities for Australia. [short citation]

29 MTPConnect, Regenerative Medicine: Opportunities for Australia. [short citation]

30 MTPConnect, Regenerative Medicine: Opportunities for Australia. [short citation]

31 Garvan Institute of Medical Research, Genomic Cancer Medicine Program, 2021 accessed 19 January 2021.

32 Australian Genomics Health Alliance, Integrating genomics into healthcare, 2021, accessed 19 January 2021.

33 Brown B, Smart Pill Bottle, Health Tech Insider, 2019, accessed 19 January 2021.

34 CSIRO, Medical Technologies and Pharmaceuticals: A Roadmap for unlocking future growth opportunities for Australia, 2017, p. 49

35 Austrade, Digital Health Industry Capability Report, 2016, p. 10

36 Unpublished data, Animal Medicines Australia.

37 IBISWorld report, Veterinary Pharmaceutical Manufacturing in Australia, August 2020.

38 IBISWorld report, Veterinary Pharmaceutical Manufacturing in Australia, August 2020.

39 Animal Medicines Australia, Animal Health Industry, 2015.

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